How to Thoughtfully Build a Total Rewards Strategy for Your Employees in 10 Steps

In today’s competitive job market, employee satisfaction and engagement have never been more critical. That’s clear from a Korn Ferry survey that found that 93% of companies are concerned about retaining their employees.

Put it this way: there’s a lot of work days between when an employee joins a company and when they decide to leave a company. What happens in those days influences their decision to stay or go At the end of the day, the more that employees feel like they are fulfilled at work, the more likely they are to stay.

A Harvard Business Review article just published in December said that most employees leave because they aren't making the progress they seek in their careers and lives. Read that again. It’s not just movement in their careers, but also how it impacts their lives outside or work. 

Giving your employee a promotion and clear career path is just one piece of the puzzle. An effective rewards strategy does more than just attract and retain employees via career growth. An intentional total rewards strategy creates a motivated, productive, and loyal workforce that drives organizational success - that looks at the big picture from the employees’ side.

We created this comprehensive guide to thoughtfully crafting a rewards strategy in 10 steps, complete with actionable insights and supporting industry data.

What are Total Rewards Anyways?

The term “Total Rewards” encompasses the full range of compensation and benefits that employers provide.The total rewards package typically include all monetary and non-monetary incentives including base salary, bonuses, health insurance, retirement plans such as 401K, career growth opportunities, work-life balance initiatives, recognition programs, and other intangible perks and benefits that contribute to the overall value employees receive from their organization.

Building a Total Rewards Strategy in 10 Steps

Total rewards refer to the holistic package of financial and non-financial benefits that employees receive, including compensation, benefits, recognition, wellbeing programs, perks, and opportunities for career development. 

Total rewards play a crucial role in attracting new talent while it’s one of the big factors in keeping current employees engaged and appreciative of their workplace. In fact, according to SHRM, 60% of employees consider total rewards a major factor in job satisfaction. Each component aligns with Maslow’s hierarchy of needs—from basic physiological needs to self-actualization—ensuring employees feel valued at every level. There’s so much to consider when building out a total rewards roadmap. Whether you choose to leverage CandorIQ’s Total Rewards solution, you should still read this 10 step guide to shed some light on the biggest stages you should be considering.

1. Conduct a Current State Assessment ‍

Begin your total rewards strategy by assessing your compensation packages, benefits offerings, and recognition programs. Compare these against industry standards and gather insights from stay interviews, exit interviews, and employee surveys.

A thorough assessment of your current Total Rewards strategy is the foundation for building an effective and competitive program. Begin by auditing your current rewards strategy to identify gaps and strengths. A detailed audit of your existing rewards structure, including compensation packages, benefits offerings, and recognition programs. Evaluate how well these align with your organization's goals and employee needs. For example, are your salary ranges competitive within your industry? Do your benefits support employee well-being and work-life balance? Identifying areas where you excel and where you fall short will help you prioritize improvements.

Benchmark your offerings against industry standards to identify gaps and opportunities to differentiate your organization. This assessment will provide a clear picture of your current state and serve as a roadmap for creating a more impactful Total Rewards strategy. A Deloitte survey found that 75% of employees believe their employer’s benefits program influences their decision to stay at a company.

2. Budgeting for a Total Rewards Strategy

‍Developing a Total Rewards strategy that balances employee satisfaction and financial sustainability requires careful budgeting. Start by calculating the total cost of your current compensation and benefits programs, including salaries, bonuses, health insurance, retirement plans, and other perks. Evaluate the return on investment (ROI) of these components by analyzing employee engagement levels, retention rates, and overall productivity. This data will help you determine if your current spending aligns with organizational goals and where reallocations or cost optimizations may be necessary.

Next, allocate a budget that reflects both short-term priorities and long-term strategic goals. For instance, if your organization is experiencing high turnover, consider directing more funds toward retention incentives, such as career development opportunities or flexible work arrangements. Factor in external economic trends, such as inflation or shifts in labor market demand, to ensure your budget remains competitive. Establishing a flexible framework for your Total Rewards budget allows you to adapt to changing workforce needs while maintaining fiscal responsibility. Regularly revisiting and adjusting your budget ensures your strategy remains aligned with employee expectations and business objectives.

3. Gather Employee Feedback

‍Employees’ perspectives are invaluable in shaping a rewards strategy that truly resonates. Gather data directly from employees to gain valuable insights into their perceptions of the rewards you provide. Conduct employee surveys, stay interviews, and exit interviews to understand what aspects of your Total Rewards program resonate most and what may be missing. 

Use these surveys, focus groups, and informal discussions to better understand what employees value most. 

Common themes might include financial rewards like stock options or RSUs, flexible work arrangements / remote work, professional development opportunities, paternity or maternity leave, or it could be as simple as offering free catered lunch in the office.

4. Secure Leadership Buy-In Throughout the Process

‍We can’t tell you how important it is to engage the leadership team early in the development of your Total Rewards strategy. Strategic communication helps create the necessary organizational clarity on what battles to wage, win, relinquish, and recover from. It is essential for its success. 

Begin by clearly presenting the findings from your assessments, including gaps in current offerings, industry benchmarks, and employee feedback. Use concrete data to illustrate how an enhanced Total Rewards strategy can address organizational pain points, such as turnover, low employee engagement, or challenges in attracting top talent. Demonstrating the potential impact of the strategy with measurable outcomes, such as reduced hiring costs or improved retention rates, helps establish its value in achieving organizational objectives.

That’s because companies with strong leadership support for rewards programs see a 31% higher employee retention rate according to Gallup.

To ensure alignment with leadership priorities, connect the rewards strategy to broader organizational goals, such as boosting productivity, fostering a culture of excellence, and strengthening employer branding. Highlight how a robust Total Rewards program can position the organization as an employer of choice, improving its reputation in the talent market and supporting long-term business growth. Additionally, emphasize the financial benefits of retaining high-performing employees versus the costs of frequent recruitment and onboarding. By tying the strategy to leadership’s key objectives, you increase the likelihood of gaining their buy-in and securing the necessary resources for successful implementation.

When presenting to leadership, offer a clear roadmap that outlines the strategy’s goals, steps, and expected ROI. Provide case studies or examples of successful rewards programs in similar organizations to build credibility and inspire confidence. Engaging leadership not only secures their approval but also positions them as advocates for the program, helping drive its adoption across the organization.

5. Align with Company Culture and Values

‍A well-designed Total Rewards strategy should seamlessly reflect your organization’s mission, vision, and values, ensuring it resonates with employees and reinforces the company’s identity. For example, if collaboration is a core value, your rewards strategy might include team-based incentives, such as group recognition programs or bonuses tied to collective performance. Similarly, organizations that prioritize sustainability could introduce rewards tied to environmentally conscious actions, such as subsidies for public transportation or eco-friendly workplace initiatives. This alignment ensures employees feel that the rewards not only benefit them personally but also support the broader purpose of the organization.

A powerful way to reinforce the connection between rewards, culture and the company mission is through storytelling. Highlight real-life examples of employees whose achievements or growth were supported by the rewards strategy. For instance, share stories of employees who pursued professional development opportunities provided by the company and used those skills to drive innovation or tackle challenges. 

These narratives not only humanize the rewards strategy but also inspire others to see how the organization’s values are being lived out through meaningful actions. By embedding the strategy within the cultural fabric of the company, you create a program that employees view as authentic and motivating.

6. Designing a Balanced and Inclusive Rewards Package

Creating a successful rewards package effectively balances a well-rounded compensation plan and non-financial incentives is crucial to addressing the diverse needs of your workforce. 

Employees at different life stages or with varying priorities will value different aspects of a Total Rewards strategy. For instance, younger employees often seek opportunities for career development, such as training programs, mentorship, or certifications, to accelerate their growth. 

In contrast, working parents may prioritize benefits like flexible schedules, remote work options, or comprehensive health insurance to better manage their personal and professional responsibilities. By offering a package that caters to these varied needs, organizations can ensure inclusivity and foster a sense of belonging among all employees.

A well-rounded rewards program should include these five common key components:

• Compensation: Base pay, bonuses, and equity options.
• Benefits: Health insurance, retirement plans, and paid time off.
• Wellbeing: Wellness programs, mental health resources, and flexible schedules.
• Recognition: Awards, promotions, and public acknowledgments.
• Development: Training programs, mentorship, and career advancement pathways.

Research underscores the importance of inclusivity in such programs—companies with inclusive benefits packages see a 27% higher likelihood of retaining employees from diverse backgrounds (McKinsey). By designing a rewards package that reflects the varied needs of your workforce, you not only improve retention but also create a culture where employees feel valued and supported.

7. Communicate Effectively An exceptional rewards strategy loses its impact if employees aren’t fully aware of its benefits. Organizations that effectively communicate their rewards programs see a 19% increase in employee engagement (Willis Towers Watson). 

So ensure your workforce understands their total rewards package by leveraging clear, consistent, and engaging communication. Use visuals like infographics and dashboards to make complex rewards data easier to understand. Use multiple channels, such as onboarding sessions, FAQ documents, dedicated intranet pages, and periodic updates, to make the information accessible and easy to digest. Tailor messaging to highlight the value of each component, emphasizing how it supports employees’ personal and professional goals. Regularly reinforce the message through newsletters, webinars, or one-on-one discussions to keep the information top of mind. A well-communicated strategy fosters transparency, builds trust, and ensures employees fully appreciate and utilize the rewards available to them.

8. Monitor and Measure Impact

‍To ensure your total rewards strategy delivers tangible results, it’s essential to establish clear Key Performance Indicators (KPIs) that reflect its effectiveness. Metrics such as employee engagement scores, retention rates, and performance indicators can provide valuable insights into the impact of your approach. By consistently tracking these metrics and gathering ongoing feedback from employees, you can identify areas for improvement and adapt your strategy to evolving needs and priorities.

According to Forbes, companies that actively monitor and refine their rewards programs report a 20% increase in productivity.

Start by selecting KPIs aligned with your organizational goals. For example, tracking turnover rates can help assess whether your rewards strategy is fostering loyalty, while Employee Net Promoter Scores (eNPS) gauge how likely employees are to recommend your organization as a great place to work. Monitoring participation in development programs provides insights into how well your employees are leveraging growth opportunities within your rewards offerings.

In addition to quantitative data, incorporate qualitative feedback through surveys, focus groups, or open forums. Understanding employee perceptions of the rewards program can uncover gaps or highlight areas that need refinement. Benchmark your results against industry standards or competitors to stay competitive in attracting and retaining talent.

Example Metrics to Track:

• Turnover rates, segmented by department or tenure.
• Employee Net Promoter Score (eNPS).
• Participation and completion rates in professional development programs.
• Employee satisfaction scores related to rewards and recognition.
• Productivity metrics tied to performance goals.

Regular reviews of these indicators allow you to make data-driven decisions and fine-tune your approach. By continuously evaluating and optimizing your total rewards strategy, you can ensure it remains effective, relevant, and impactful in supporting both employee satisfaction and organizational success.

9. Stay Adaptable and Current

‍To ensure your total rewards strategy remains effective and relevant, you must keep an open mind and adopt a proactive and iterative approach. Start by gathering regular feedback from employees through surveys, focus groups, and one-on-one discussions to understand their evolving needs and preferences. Pair this qualitative input with quantitative data, such as turnover rates, engagement scores, and benchmarking studies, to identify trends and gaps in your current strategy. Monitor industry reports and competitor benchmarks to keep your rewards program competitive.

Next, prioritize flexibility and personalization. For example, as remote and hybrid work environments become the norm, consider implementing flexible work hours, remote work stipends, and home office setups. Offer employees the ability to choose from a range of benefits—such as increased PTO, wellness programs, or additional training budgets—tailored to their unique circumstances and career stages.

Stay informed about market trends and innovations by actively monitoring industry reports, attending HR conferences, and networking with peers. Use this insight to pilot and test new initiatives, such as integrating technology to streamline benefits access or introducing programs focused on mental health and well-being.

Finally, establish a review process where you assess the effectiveness of your strategy on an ongoing basis. This could involve quarterly reviews of key metrics or an annual strategy refresh to align with organizational goals and employee expectations. By embedding flexibility and continuous improvement into your approach, you ensure your total rewards strategy evolves alongside the needs of both your workforce and the market.

10. Celebrate and Recognize Successes

‍A key component of any successful total rewards strategy is celebrating and recognizing achievements, both individual and collective. Sharing stories of employees who have directly benefited from the rewards program helps demonstrate its value and creates a sense of connection and purpose within the organization. These stories not only highlight the tangible benefits employees receive but also reinforce the company’s commitment to their well-being and growth.

Recognition should go beyond financial incentives to include meaningful acknowledgments that resonate with employees. Celebrate milestones such as promotions, project completions, and outstanding contributions with awards, shout-outs in team meetings, or public acknowledgment in company newsletters or social media. Tailoring recognition to individual preferences—whether a personal thank-you note, a leadership mention, or a team celebration—can amplify its impact.

In fact, research from the O.C. Tanner Institute’s Global Culture Report revealed that highly fulfilled employees are likely to remain with their organization for three years longer than their unfulfilled counterparts.

When employees feel their efforts are noticed and valued, it fosters a culture of appreciation and motivates others to strive for excellence. By weaving recognition into the fabric of your organizational culture, you create an environment where employees feel inspired to perform at their best and remain engaged in achieving shared goals.

A Successful Total Rewards Program Requires a Thoughtful Strategy

A successful total rewards program starts with a well-thought-out and intentional strategy that carefully balances employee needs with organizational objectives. By understanding the core elements of total rewards, actively seeking employee feedback, and aligning your approach with company values, you can create a program that attracts top talent, enhances engagement, and fosters long-term loyalty. This alignment ensures that your rewards strategy not only meets employee expectations but also supports broader business goals.

After all, according to Mercer’s 2022-23 Global Talent Trends study, 89% of HR professionals identify enhancing total rewards as a top priority.That’s nearly 9 out of 10 people in Human Resources that they polled. So if you’re in HR and not thinking about it, you better start today.

Regular evaluation and flexibility are key to maintaining an effective rewards program in today’s dynamic workplace. As needs and trends evolve, adapting your strategy ensures it remains relevant and impactful. A thoughtfully executed rewards program is more than a collection of benefits—it is a strategic tool that drives productivity, satisfaction, and overall organizational success.

How Can CandorIQ Help?

Those “just” ten steps might seem like a lot—trust me, I know. There’s a reason businesses contract out total rewards work or even ignore it altogether. But it doesn’t have to be scary. CandorIQ specializes in making personalized total rewards planning and implementation a lot easier. We have loads of resources and the platform is designed to help you manage your compensation, total rewards, and headcount truly from end to end.

If you want to learn more about how, schedule a demo with the team.

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